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Home My WebLink About16-1 Reserves POLICY Section Policy No. Page Financial 16-1 1 of 5 Policy Title Date: Motion No. Reserves July 21, 2026 210/26 Policy Statement The County recognizes reserves as an important financial planning and governance tool. Reserves will be established, funded, managed, and utilized in a manner that supports long-term financial sustainability, responsible stewardship of municipal assets, stable taxation, and effective delivery of municipal services. Reserves are intended to serve as a strategic financial planning mechanism supporting Council decision- making. The existence of reserve funding does not constitute pre-approval for expenditures, and all reserve- funded expenditures remain subject to Council approval. Purpose To establish guidelines and principles for the creation, funding, management, and use of County reserves to support long-term financial sustainability, infrastructure planning, and consistent financial decision-making. This policy establishes governance principles for reserve management and does not prescribe reserve balances, funding targets, or reserve-specific contribution methodologies, which may be addressed through future financial planning and reserve strategy initiatives. Policy Guidelines 1. General Principles 1.1. County reserves are established to support long-term financial sustainability, stable taxation, responsible asset management, and planned funding of municipal services, infrastructure, and future obligations. 1.2. Reserves are intended to: • Support planned funding for future capital and operational requirements; • Reduce reliance on long-term borrowing where practical; • Stabilize fluctuations in taxation and operating requirements; • Support long-term infrastructure and asset management planning; and • Provide flexibility to address significant or unforeseen expenditures. 1.3. Reserve planning and funding decisions should be informed by asset management plans, long-term financial planning, and anticipated infrastructure and capital replacement requirements. 2. Reserve Categories 2.1. Council may establish, modify, consolidate, rename, or close reserves through resolution or as part of the annual budget process. 2.2. Administration shall provide supporting rationale and analysis when recommending the establishment, modification, consolidation, renaming, or closure of reserves. Recommendations should consider operational requirements, asset management needs, financial sustainability, legislative requirements, and Council priorities. POLICY Section Policy No. Page Financial 16-1 2 of 5 Policy Title Date: Motion No. Reserves July 21, 2026 210/26 2.3. The County may establish reserves for purposes including, but not limited to: • Infrastructure replacement and rehabilitation; • Equipment replacement; • Operating stabilization; • Future projects and initiatives; • Emergency response, disaster recovery, and business continuity requirements; • Legislated or externally restricted purposes; and • Other strategic priorities approved by Council. 2.4. Reserve categories may evolve over time to reflect changing operational requirements, asset management needs, legislative requirements, financial conditions, and Council priorities. 2.5. Certain reserves may be subject to legislative, bylaw, contractual, grant, or other restrictions regarding their use. These reserves shall be administered in accordance with the applicable restrictions. As of the approval date of this policy, the County maintains the following restricted reserves: • Municipal Reserve; • Water Service Area Reserve. 3. Reserve Funding 3.1. Reserve funding decisions should be aligned with long-term capital planning, asset management priorities, financial sustainability objectives, and Council priorities. 3.2. Reserves may be funded through: • Annual operating budget contributions; • Operating surpluses allocated by Council; • Proceeds from the sale of County assets; • Investment income allocated in accordance with this policy; • Grant funding or externally restricted funding; • Other funding sources approved by Council. 4. Use of Reserves 4.1. Reserve funds shall be used only for the purpose for which they were established unless otherwise approved by Council. 4.2. The existence of a reserve does not imply authority for expenditure. All use of reserve funds remains subject to Council approval through the applicable budget and governance processes. 4.3. Use of reserve funds should support approved budgets, project plans, and Council priorities while maintaining long-term financial sustainability. 4.4. Council may identify reserve funding as a source of financing for approved projects and initiatives. Where alternative funding sources become available for an approved project or initiative, reserve POLICY Section Policy No. Page Financial 16-1 3 of 5 Policy Title Date: Motion No. Reserves July 21, 2026 210/26 funding originally allocated to the project shall remain in, or be returned to, the applicable reserve unless otherwise directed by Council. 5. Income Allocation 5.1. General Principles Allocation of non-tax revenues shall be guided by principles of long-term financial sustainability, asset replacement requirements, reserve adequacy, and Council priorities. The provisions of this section are intended to support long-term financial planning and infrastructure sustainability while maintaining Council’s authority and flexibility through the annual budget process and by resolution. 5.2. Investment Income Investment income exceeding amounts included within the approved annual operating budget will be transferred to the Infrastructure Reserve. This approach is intended to support long-term infrastructure sustainability while maintaining Council’s flexibility to reallocate funds through the annual budget process or by resolution. Investment income budgeted within the operating budget shall not exceed 50% of the average actual investment income from the five previous fiscal periods in order to support stable operating revenues and long-term reserve funding. 5.3. Capital Equipment Plan Proceeds Net proceeds received from the disposal or sale of equipment included within the Capital Equipment Plan shall be transferred to the Capital Equipment Plan Reserve to support future equipment replacement requirements. The transfer of proceeds is intended to maintain funding available for future replacement of County equipment and is not dependent on the accounting gain or loss recognized on disposal. This approach supports lifecycle funding discipline and aligns with asset replacement strategies. 5.4. Operating Surplus Allocation of available operating surpluses shall be guided by reserve funding requirements, capital funding priorities, asset management objectives, financial sustainability, and long-term obligations. Administration may provide recommendations regarding surplus allocations based on reserve funding requirements, asset management priorities, long-term financial planning considerations, and Council priorities. Council will allocate available operating surpluses through the annual financial reporting and budget process. POLICY Section Policy No. Page Financial 16-1 4 of 5 Policy Title Date: Motion No. Reserves July 21, 2026 210/26 Policy Procedure/Guidelines 6. Authority and Approval 6.1. Council retains authority for: • Establishing reserves; • Closing reserves; • Transfers to and from reserves; • Allocation of operating surpluses. 6.2. Transfers to and from reserves shall be approved through: • Annual operating and project budgets; • Council resolution; or • Other mechanisms as authorized by legislation. 6.3. Council may authorize transfers to reserves for approved projects or initiatives that are not completed within the fiscal year and require funding to be carried forward to a future period. 7. Administration 7.1. Responsibility Administration of reserves shall be the responsibility of the CAO or designate. Administration will provide strategic advice to Council regarding reserve structure, reserve adequacy, funding approaches, and long-term financial sustainability. 7.2. Administrative Functions Administration shall: • Maintain reserve records and continuity schedules; • Monitor reserve balances and activity; • Periodically review reserve balances and reserve purposes and may recommend changes to reserve structure, funding, or utilization; • Provide recommendations regarding reserve funding and reserve utilization as part of the annual budget process; • Ensure reserve transactions are properly authorized and recorded; and • Report reserve activity to Council. 8. Reporting 8.1. Reserve activity shall be reported to Council through: • Annual budget documentation; • Quarterly financial reporting; • Annual financial statement disclosures. POLICY Section Policy No. Page Financial 16-1 5 of 5 Policy Title Date: Motion No. Reserves July 21, 2026 210/26 8.2. Reserve reporting should include sufficient information to support Council oversight and decision- making, which may include: • Opening reserve balances; • Contributions from the operating budget; • Draws from reserves for operating or project budget funding; • Investment income allocations; • Proceeds from asset sales; • Transfers between reserves; • Reserve-funded expenditures; • Other reserve transactions approved by Council; and • Ending reserve balances. Approved: Sept 9, 2003 433/03 Amended: June 22, 2004 321/04 Amended: June 10, 2014 234/14 Approved: July 21, 2026 210/26 Review Date: July 21, 2030